Want to avoid deal failure? Ready the seller

Stacy Feiner is an adviser and coach at SS&G Parkland. For more than 15 years, Dr. Feiner has been coaching business leaders to take deliberate steps to improve their performance and advance their organizations.

The simple formula for a successful transaction comes down to ready seller, ready buyer. When transactions stall or fall apart, it is often the result of the seller not being ready. It's tough to know the signs of a seller who has unspoken, unexamined hopes and dreams that can seem in competition with the parameters of the deal. But what if you could prevent the following situations?One case I worked on, an owner died unexpectedly, the widow found herself with the option to sell the company and in the 11th hour, pen in hand, decided not to go through with it. In another instance, a banker flew to Florida for a second time to get the deal signed by the client, only for the client to change his mind again. With a third client, an owner decided to abruptly pull out of due diligence after hearing the price another owner had achieved. Consider this: 75% of all business owners report they are dissatisfied with their decision to sell their business a year after the deal closed. In a recent situation a successful transaction left the seller with a windfall but no idea what he would do in his retirement. Someone suggested golf and travel, but a year later, he regretted the decision.

Whether it's feeling ambivalent during pre-sale or dissatisfied post-sale, these experiences are far more prevalent among business owners than we have been willing to admit. Ideally, ready sellers understand exactly how selling their business will impact their life and the things that matter most, and are equipped with psychological readiness for a successful transaction.Understanding the individual psychology of each seller ensures that they are prepared for and satisfied with all the implications of their decision. So how can advisers and business owners pay more attention to this? One important way to ensure sellers are ready is to help them see beyond the transaction, and instead embrace the transition:

First, do a deep dive of the options owners have for transitioning out of their business. For example, an owner was leaning toward selling his business thinking that his son was just too inexperienced to succeed him as owner. When we considered hiring a professional management team, and established a three-year leadership curriculum for the son, the seller began to envision how his dream could be realized.

Second, when differences of opinion arise with an owner, seek to understand what needs the owner has that the deal is not meeting. Don't misinterpret an owner's position as a sign of resistance, lack of trust, ego or inexperience. Take the time to ask questions about what isn't working for the owner, and be willing to rework the deal in ways that include more than just the sale price as the desired outcome.

Third, be forthcoming about the realities the owner may face after the deal is signed: how “buy-out agreements” don't often play out as planned for the seller, or how often sellers regret their decision when they don't have a well thought-out plan for their life when they are no longer running their company.

Finally, consider rounding out the deal team with a coach who has a methodology, master plan and proactive approach that applies psychology to ensure sellers are ready. Owners deserve to end as strong as they start. They deserve to know what success looks like financially, as well as for their family, their business and their future.Having the mechanics and the skills of the game isn't enough. Business owners need the mental toughness to be ready for this life-changing transaction. Focusing on psychology can ensure owners are ready for a successful transaction. Remember: ready seller, ready buyer.A coaching methodology can help business owners understand what they want, pursue it with passion and achieve it at the highest level. Leave no stone unturned. The psychology of your decision should rest squarely in your hands.

Morning Roundup

Business headlines from Crain's Cleveland Business and other Ohio newspapers — delivered FREE to your inbox every morning. Sign up for the Morning Newsletter.